uBiome to Close Doors One Month After Bankruptcy Filing
First reported by Business Insider, September’s Chapter 11 filing has now become a Chapter 7 bankruptcy, which means the company will cease operations and become a liquidation sales. According to the report, uBiome has been unable to secure any additional loans to keep it afloat while it was in bankruptcy protection. uBiome leadership shared the news with its employees in an email, according to the report. However, the company has not yet publicly announced its intentions to shut its doors.
When the company filed for Chapter 11 in September, its board of directors noted that uBiome was seeking a potential buyer. During the bankruptcy process, uBiome had secured some financing from 8VC and Silicon Valley Bank to support its ongoing operation. It would appear that those funds will not be extended, nor has a buyer expressed interest in the company.
Despite a 10% workforce cut in January to support a strategic shift to a focus on drug development, 2019 started well for uBiome, at least from outward appearances. Earlier this year, uBiome was named one of the top five companies to emerge from incubators in the Bay Area. The company came out of StartX, Y Combination and 500 Startups. As of January, it had raised more than $109 million to support its technology. Last year alone, the company raised $83 million in Series C financing.
However, the wheels began to publicly come off in April, two months after striking a partnership with L'Oréal. The FBI raided the offices of uBiome following intense scrutiny of the lab-testing company’s billings involving Medicare. Following the raid, the company’s co-founders and co-chief executive officers were placed on administrative leave. John Rakow, the company’s general counsel took over as interim CEO, but he stepped down from that role two months after taking on the job. The company also slashed more staff over the summer, dropping its remaining workforce to less than half what it started with at the beginning of the year.
In August, company insiders told Business Insider that uBiome’s science was flawed, which raised concern over the accuracy of their product. At the time of the report, only a few weeks ahead of its bankruptcy announcement, uBiome said it would conduct an internal investigation. A scientific journal that published the company’s data told BI that it too would investigate the report.
Founded in 2012, uBiome uses advanced technology to analyze the microbiomes on the human body. Its chief product is a stool test that identifies microbes in the gut for patients with chronic gut conditions such as IBD, IBS, Crohn’s Disease and ulcerative colitis.